Managing your Trading Risk

Basically, the best traders know when to get in and when to get out. They usually look for a 3:1 risk/reward ratio. The downside risk must be less than the upside potential. While there are several levels of success on the upside, there is only one level of risk on the downside. There are never [...]

Gap Openings

In the event of a gap up opening where the futures gap above fair value and stocks open higher than the prior day’s close, the rule to remember is that the 5- and 15-period moving averages need to catch up. Shorting gaps up is naturally countertrend. This sets up opportunities to place shorts off existing [...]

Intraday Traders should start out as a Scalper

Every trader needs to start off as a scalper. A scalper is a trader who expects a move from point A to point B in a relatively straight line. The scalper’s aim is to get in and out with the least amount of wiggles and noises. Scalpers will tend to actually be the most risk-averse [...]

Find Clarity….Then Enter a Trade

Risk management is as important when opening trades as it is when exiting trades. Once started on the wrong path, mistakes and errors seem to follow naturally, setting in motion an emotionally driven comedy of errors that results in inevitable loses. Positions that are opened based on confusion or a lack of clarity generally result [...]

Supply and Demand. How to profit.

When supply and demand are in equilibrium, the price of a stock is stable and will move sideways on a price chart. Day trading is perhaps the purest form of making this determination since day traders react to imbalances to either profit from follow-through where demand continues to exceed supply on micro trends or fade [...]